Industry Vet Plans Crunch Growth

CHICAGO — Marc Tascher has big plans for Crunch. So big, in fact, that the upscale brand may eventually reach beyond the U.S. border. Tascher, the co-founder and former chairman and CEO of Town Sports International (TSI), teamed with Angelo, Gordon & Co., a private equity firm with $9 billion under management, in September to buy all 21 Crunch clubs, two Gorilla Sports clubs and two Pinnacle Fitness clubs from Bally Total Fitness for $45 million in cash. Bally bought the 19 Crunch clubs in 2001 in a cash/stock transaction valued at nearly $90 million.

During his 22 years at TSI, Tascher helped to grow the company from a single squash club to one of the nation's largest fitness chains.

“We built TSI to be a billion-dollar company,” he said. “I think TSI's successful growth and stability is proof that it was set up correctly.”

The 54-year-old New York native is currently building Sports and Fitness Ventures, a $12-million health club company. In the past six months, he has actively been looking to expand the company, and when Bally put Crunch up for sale, Tascher viewed it as a good opportunity to acquire viewed it as a good opportunity to acquire a well-known brand. He said he's always admired how Crunch clubs were able to set themselves apart.

“The company was able to take the generic concept of a health club and differentiate itself to the point that people are willing to go out of their way to go to a Crunch club,” Tascher said.

Once the deal closes, Tascher will own 33 Crunch clubs — 16 in New York, six in San Francisco, five in Chicago, two in Atlanta, two in Washington, DC, one in Los Angeles and one in Miami. He plans to convert the eight health clubs he already owns in Washington, DC, and New York into Crunch clubs. Bally is keeping the name Pinnacle Fitness, so he'll also rebrand the two Pinnacle clubs and two Gorilla clubs as Crunch clubs.

Crunch already has many elements of a successful business — a strong brand, a loyal membership base, superior locations, enthusiastic employees and a good culture, he said. He plans to focus on licensing and co-branding opportunities, get Crunch back to where it was a few years ago and reinvest in the current Crunch clubs.

Doug Levine, founder of Crunch and now chairman of Push.net, said he'd like to see Crunch return to its innovative roots.

“I think it's good for the company to have a new investor who will focus on the brand and hopefully restore it the cachet that it once had,” Levine said. “I would like to see them spend the money to improve the existing facilities and become cutting edge again in their programming, classes and equipment.”

Levine applauds Tascher's plans to expand Crunch, which already owns its trademark in the European Union, Japan and many Latin American countries.

“Crunch has worldwide name recognition,” Tascher said. “We don't limit its potential to the United States.”

Although Crunch already has a strong presence in New York, Tascher sees more opportunities for growth despite the challenges of finding real estate and the increasing popularity of health clubs within new high-rise buildings.

The sale of Crunch will not only allow Tascher to take the clubs to the next level, but also give Bally the opportunity to refocus on its core middle-market customers and pay down a $175-million loan. Bally, which is under investigation by the Securities and Exchange Commission, has until Nov. 30 to file audited financial statements and early 2006 to schedule a meeting for shareholders.

Bally CEO Paul Toback said although Crunch is a prestigious brand with great potential, Bally's capital needs to be directed toward the Bally-branded clubs and debt reduction. The three parties expect to finalize the Crunch sale in the fourth quarter of 2005.